Open-Item Accounting

 

Before learning how DELPHI32 deals with payments received from insurance carriers and clients, you must first understand the concept of "Open-Item Accounting."  From an accounting perspective, there are two possible methods for applying payments against a client account.  One method is called "OPEN-ITEM" accounting and the other is called "BALACE FORWARD" accounting.  Each is described briefly below:

  Open-item accounting - An "open-item" is simply a charge for a session that still has a balance owing.  Insurance carriers are very specific about how much they are paying for each individual procedure or session.  If you bill an insurance carrier for four (4) sessions for a client, the insurance coverage might not pay for the first session due to a deductible not yet being met,  80% for the second and third sessions, and 50% of the fourth session.  Until the insurance company pays for a session you will have an "open-item." DELPHI32 was designed to be an 'open-item' accounting system.  

  Balance forward accounting - In a 'balance forward' accounting system, all payments are applied against the total balance owing on the account.  Most people easily identify with this method as it is the same type of payment system as they experience with their own personal credit cards (VISA, MC, etc....)  Say you charge a hotel visit, dinner and a car rental at $100 each ($300 total) and later make a $200 payment against the total balance owed.  Your ending balance will be $100.  In balance forward accounting, you make no attempt to specifically pay the individual charges at the hotel, restaurant, and rental car company.  Your payment just reduces the total balance owed by the amount you paid.

 

Now that you know the difference between open-item and balance forward accounting, you need to understand that DELPHI32 is an Open-Item accounting system.  This is an absolutely critical difference between DELPHI32 and other practice management software.  The bottom line: Each payment you receive, along with other discounts, write-off's or other adjustments are specifically applied against individual sessions.